Will B.C. port be boon to Southeast?

Some believe $170 million upgrade at Prince Rupert could help AK businesses

Posted: Friday, November 23, 2007

By AMANDA FEHDJUNEAU EMPIRE

A two-year, $170 million expansion of Prince Rupert's port, and agreements with top names in shipping, has this small Canada town's officials talking about it becoming a rival for major ports on the West Coast.

That's got a lot of people in Southeast Alaska's economic development circles buzzing too. While there are naysayers, some see the port as potentially a huge boon for getting Southeast's products, particularly fish, to Asia and the American Midwest.

Prince Rupert, British Columbia, has always shipped coal, timber and grain in bulk. Until this fall, it was never equipped to accept containers, which carry products from toys to clothes to motorcycles.

The biggest challenge would be getting those products from towns in Southeast to Prince Rupert, a move that would involve reconfiguring existing freight traffic or creating a new system.

Still, many see big benefits on the horizon.

"It creates a phenomenal opportunity not just for Southeast, but all of Alaska," said JC Conley, a Ketchikan businessman who is on the board of Southeast Conference, an organization that promotes economic development in Southeast Alaska.

"It gives us a direct link to Asia, and a tie in to the Midwest of the U.S. If we are shipping frozen fish, we've got a major port five hours south of Ketchikan. It puts our product about four days sooner into Asia," Conley said.

Ketchikan's Mike Round said he was the only Alaskan at the container port's grand opening this fall. Also in attendance were representatives of companies throughout Asia and businesses and municipalities from Canada, Chicago and other U.S. cities. Round is a member of the Ketchikan Chamber of Commerce's Economic Development Committee.

"To me, it's incredible that you can have a world-class port being developed and nobody in Alaska is paying attention," Round said.

Port enthusiasts say one main factor to getting benefits to Alaska is the involvement of the region's two main freight lines, Northland Services and Alaska Marine Lines, both based out of Seattle.

AML did not return repeated calls over several days, and Northland did not return a call for comment.

Alex McKallor with Lynden Transport, a ground freight sister company to Alaska Marine Lines, said the port's potential effect on West Coast shipping is "minuscule."

Fast facts

Prince Rupert, Canada

 population - 14,643.

 port capacity - 500,000 20-foot containers.

 317 miles southeast of Juneau.

 436 miles, or one and a half days of sailing time, closer to Shanghai than Vancouver.

 more than 1,000 miles, or almost three days, closer to Shanghai than Los Angeles.

 2,600 miles to Chicago by train.

 85 miles southeast of Ketchikan.

 deepest port on the West Coast; 124-foot-deep harbor can handle largest ships in existence, with 61-foot-deep berth.

 rail system runs through the lowest-grade passes in the Rocky Mountains, "meaning less winter weather impact than other railways."

For more information, go to www.rupertport.com/index.php

Source: Prince Rupert Port Authority

"It's not going to have some kind of major impact, I don't think, to the whole supply chain of Alaska. It will certainly bring more transportation options," McKallor said. "It's not clear how they'd fit together. It's just way too complex to know."

"The critics need to kind of get with the program, because a lot of the comments are so outdated and obsolete. There's obviously people that are really not interested in seeing Prince Rupert work, because it could be seen as a threat," Bartlett said.

To make an ocean freight business work, companies seek to have their ships as full of goods as possible in each direction of trade. Ships coming from Asia are generally packed full, while two out of every three containers leave Western ports empty, according to Bartlett.

Alaska products help Northland and AML fill their Asia-bound ships from Seattle. Conley said that might be a factor in the companies' hesitance to jump on the bandwagon.

"If that's your big revenue stream is hauling it to Seattle, that's important to them. It balances the rates," Conley said. "They don't want their barges sailing empty completely on the backside."

Most of what arrives in Prince Rupert will immediately leave on a train to a distant location such as Chicago, a plan that's a departure from the business models of other major ports.

"There's a general assumption in the industry that you've got to have local markets, but we are saying, really, no you don't," Bartlett said. The remote town has a population of 14,000.

The port's main selling point is that it's three days closer to Asia than Los Angeles. It's also not as congested.

"Container traffic from Asia to the West Coast of North America is going to increase 300 percent by 2020," Bartlett said. "When you consider all the issues that are occurring in Vancouver, Seattle, L.A., Long Beach, relative to congestion, lack of capacity, and pushback from the communities, communities are saying enough is enough, we've got too much traffic, here that's not an issue," Bartlett said.

The port has agreements with the largest shipping line in China, the China Ocean Shipping Co., or COSCO, which is also the seventh largest shipping line in the world. Another three companies from Taiwan, Korea and Japan have agreed to have goods moved through there. A COSCO ship made its first stop at the port in October, and 12 days after leaving Yokohama, Japan, the goods were in Chicago.

Maher Terminals, which operates the ports of New Jersey and New York, has signed a 30-year lease agreement with Prince Rupert Port and invested $60 million in new cranes and other equipment to allow the port to handle containers.

The port now has the capacity to accept the equivalent of 500,000 20-foot containers. It plans to spend another $600 million to expand that capacity to 2 million 20-foot containers by 2012, and 4 or 5 million by 2015. In contrast, the Port of Seattle handles the equivalent of 2 million 20-foot containers each year.

Sandy Souter is the fleet manager for Seattle-based Alaska General Seafoods, a fish processor with a cannery in Ketchikan. He said any barge line is going to have to see a good return on making a stop in Prince Rupert.

"Eventually it will be good for Southeast, I don't know how. Everybody thinks yeah, that's positive because you've got a big port closer to Southeast Alaska and there's going to be commerce going out of there to Asia and overseas. It's 'We'll tell you in five years type of thing," Souter said.

Asked if it could be another Seattle or Los Angeles, Souter said "I don't think so. It will be a big port, but it's not going to rival any of the lower mainland I don't think. That's a pretty lofty goal. To try to get up to the level of Seattle or Long Beach or Oakland, forget it, in Prince Rupert?"